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FirstEnergy plan has
special rate certainty

First you get rid of market

Listen to the hidden horrors in FirstEnergy's newest plan to end shopping in Ohio.
       FirstEnergy filed its "rate certainty plan" as an alternative to a fuel-cost rate hike in its rate stabilization plan (RSP).
       The plan promises lower rates over the next three years but only through the accounting trick of postponing recovery of fuel and other costs -- like tree-trimming and property taxes -- for 25 years.
       Yes, customers in 2035 would still be paying for a slightly lower standard offer rate in 2006 along with tree trimming and property taxes.
       They'll be paying many millions just in interest.
       Constellation Energy, WPS Energy Services and Direct Energy estimate the tab would be $550 million for short-term rate relief, they told the PUC.
       With carrying costs, it could be more like $934 million -- the figure FirstEnergy filed with the Securities & Exchange Commission, according to the marketers.
       If anything, it's even a worse deal than the RSP since all those deferred costs will go into FirstEnergy's wires charge that shoppers can't avoid.
       Shoppers will be paying for fuel costs for non-shoppers -- plus interest -- for 25 years.
       The deferred fuel costs aren't included in the shopping credits either, so shoppers actually pay twice.
       Customers ultimately are going to pay near-term fuel costs, the marketers pointed out.
       The only difference between the RSP fuel rate hike and the certainty plan is when customers pay and how much more they'll pay in the future.
       Customers in 2009-2033 will pay as much as $450 million in higher distribution charges but won't be getting any extra distribution services for their money, the marketers added.
       Some $205 million FirstEnergy offered to use to cut its extended regulatory transition charge was supposed to be applied to lower the utility's distribution rate charge in its next rate case.
       The case would be put off one year until 2009 under the certainty plan.
       The damage to FirstEnergy's competitive market includes below-market rates over the next three years distorted even more since fuel charges won't be credited to shoppers in their shopping credits.
       Postponing the fuel charges dooms the next auction for competitive supply that is to compete with the distorted rate under the certainty plan.
       The plan is complicated, the marketers accuse.
       It's so complex, it doesn't make clear that customers at Ohio Edison and Toledo Edison end up subsidizing Cleveland Electric Illuminating rates.
       Is it possible stakeholders who signed off on the rate certainty plan dug into the details?
       Signers include the Industrial Energy Users-Ohio, Ohio Energy Group, cities of Parma, Akron and Cleveland, Ohio Partners for Affordable Energy, Ohio Consumers' Counsel and other groups.
       The two huge FirstEnergy community pools -- Northeast Ohio Public Energy Council and Northwest Ohio Aggregation Coalition -- indicated they wouldn't oppose the certainty plan.
       NOPEC's supplier Green Mountain Energy pulled out beginning next month so the group is beholden to FirstEnergy for a deal that allows its customers to get a discount anyway.
       NOPEC members account for half of all Ohio power shoppers (see story and table on page two).
       Originally published in Restructuring Today on December 20, 2005

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